Property prices: ‘extreme wealth enclaves’ on way
Daft.ie reports average price now €257,000
A LEADING property expert has said that “enclaves of extreme wealth” will be created for the first time in Ireland in which house prices will remain “high and stable”.
The exclusive residential districts, mostly in Dublin although also along the Wild Atlantic Way, will see further rises in prices to “track international premium locations”, according to the former chairman of the Housing Agency, Dr Conor Skehan.
His predictions follow the release of the latest report by property website Daft.ie which confirms a nationwide slowdown in the upward trend of house prices nationwide, particularly in Dublin, with prices still marginally increasing elsewhere.
The most likely locations for these enclaves of extreme wealth will be Georgian heritage areas in Dublin, coastal areas of the capital, and parts of the Wild Atlantic Way that will become “the Switzerland of the Atlantic” with “associated pricing” of residential properties.
The creation of exclusive enclaves will be led by emerging demand from the international community in Ireland, said Dr Skehan.
“Property associated with this market will have high and stable prices that will track international premium locations,” he said.
Dr Skehan correctly predicted in 2011 that the property market was within months of hitting the bottom and that house prices in the greater Dublin area could rebound with “the speed and vigour of a ping-pong ball released under water”.
Meanwhile, analysis released by Ireland’s largest property website Daft.ie today indicates that the relentless rise in house prices in recent years is continuing to slow
down with prices virtually static in Dublin in the last three months. House prices nationally rose by just 1.3pc since June, according to the report.
It finds the average price nationwide for a house is now €257,000, some 6.6pc higher than a year ago.
Writing in this week’s Sunday Independent, Dr Skehan stated: “The country’s main economic engine — the Greater Dublin Area — will contain very extensive areas of high value commercial and retail lands — though in small concentrated areas — that will service a growing international finances services sector as well as continued multinational high-tech, high-value manufacturing facilities.
“These will have a number of different and separated locations — the most prestigious being in down-town Dublin — but the rest — especially larger ones — strongly concentrated along major transportation routes — particularly around the M50. The associated residential areas for these new uses will also favour historic red-brick areas, as well as historic village and small-towns on rivers and canal locations in east Leinster as well as coastal properties — especially the many coastal villages north of Dublin,” he said.
Dublin home prices overall will remain high and relatively stable due to demand and the artificial scarcity of developable land caused by the “foolishness” of the National Planning Framework.
“Within this area, congestion will begin to become a major determinant of property prices — with well-connected and less-congested areas being much more highly prized.
“This will favour coastal areas as well as north Dublin and south Meath where airport proximity and excellent commuter rail service will become a strong price differentiator,” he said.
But in the rest of Ireland, there will be “an extremely varied mixture of fortunes and considerable volatility” caused by “a persistent pattern of well-intentioned, but unwise and unsustainable policy interventions that continually create ‘boom and bust’ cycles.”
The Daft.ie report states that, compared to their lowest point in 2013, house prices nationwide have risen by an average of 56pc, or just over €92,000.
In Dublin, prices rose by just 0.2pc in the third quarter of 2018, the smallest threemonth gain since late 2016.
This was also seen in cities, with much more muted price gains in Galway (1.1pc) and Limerick (1pc), and largely stable prices in Waterford (0.2pc rise) and Cork city (0.1pc fall).
Outside the main cities, prices have risen by 2.2pc since June.
The number of properties on the market continues to rise with almost 25,000 properties for sale in September, roughly 1,000 higher than a year ago.
The increase in availability is almost entirely driven by Dublin, where stock on the market has improved 40pc year-on-year.
The rest of Leinster has also seen a 7pc rise in the number of homes for sale. But the numbers of homes for sale in Munster and Connacht-Ulster has decreased.
Commenting on the figures, Ronan Lyons, economist at Trinity College Dublin and author of the Daft.ie Report, said: “Commentary on the housing market often questions the degree to which the laws of supply and demand apply to it.
“Nonetheless, just as the huge increase in supply in the mid-2000s pushed down prices once easy credit stopped, the much more proportionate increase in construction in recent quarters is having an effect. With availability in and around Dublin in particular improving, we should expect to see more muted inflation in the housing market in the coming quarters.”
Martin Clancy, of Daft.ie, said: “This latest research highlights the changing trends in our housing market. House prices are still increasing, but the rate of increases, especially in Dublin has slowed down considerably due to a 40pc increase in housing stock on Dublin the market.
“On average, over 1,000 searches are taking place every minute of every day on Daft.ie, a figure that is continuing to climb.”
Average asking prices and year-on-year changes in the third quarter of this year: Dublin City €375,652 (up 5.9pc); Cork City €273,490 (up 5.1pc); Galway City €288,334 (up 6.1pc); Limerick City €191,362 (up 7.6pc); Waterford City €173,283 (up 8.3pc).
EVEN in some of its poorest times, Ireland had its priorities straight. Through the squalor of the 1920s and 1930s, the stagnancy and recessions of the 1950s and 1970s, the Government provided social housing.
Back then, social houses were not reserved for the most impoverished. They were also available to workers on low-incomes.
In fact, up until the late 1950s, as many as one in two or one in three homes nationwide were social housing.
They brought the people who lived there stability, increased independence, better health and a greater ability to work — which led to economic and social growth.
But in the 1980s, things changed. The Government opted for a new low-tax, lowspend economy and social housing suffered the first big cutback.
Homes were no longer made available to workers on low-incomes. Instead they were reserved only for a very narrow range of long-term welfare dependants — and became known as ‘welfare housing’.
For the next three decades, the task of providing social housing was foisted upon private developers, which has led us to a situation today where 80pc of the 25,500 new social tenancies come from the private sector.
For private developers to shoulder the costs and taxes and meet the demand, property prices and rents must be kept high. This has created a massive affordability problem.
It means more and more young people have little or no chance of ever owning their own home. They are also paying exorbitant rents in a rental market that is fit to burst at the seams.
This has led to spiralling waiting lists for social houses and spilled into a homelessness problem on our streets.
And to keep this circus go-
ing, the Government is spending millions on paying rent supports to private landlords in a sector that provides little or no security for tenants.
To top it all off, rather than seeing the lunacy of it all, over the past year the Government has become even more, not less, reliant on the private sector to provide social housing.
Only 4pc of new social homes provided in the first six months of 2018 were built by local authorities, figures just published by the Department of Housing show.
Meanwhile, those in charge are feeding us excuses to avoid criticism for the failure to meet their responsibilities.
They tell us land around Dublin is scarce (we have all the land that we need to accommodate the capital’s population twice over) and building takes time, when they have had years to take clear and measured steps that would fix the problem.
Remember, also, that money has never been so cheap. The Government could borrow from international banks or the European Central Bank (ECB) to build what is needed and make a profit in the long run — if that’s what they see fit. With interest rates on borrowing money at less than 1pc, the State can build houses and apartments and get a return of 3-5pc depending on what rent they charge.
The Ireland Strategic Investment Fund (ISIF) could also borrow and keep the housing as a long-term investment — killing two birds with the one stone — sorting out the housing crisis while creating a longer-term investment.
The money made from this could even be used as part of the National Pension Reserve Fund to fund future pensions.
If the Government continues to refuse to meet the demand for social housing itself then it is very simply going to have to cut VAT on housing from 13.5pc to 9pc for the private sector.
This point always leads to that worn-out old retort ‘the developers will only pocket the difference’. But who do you think is paying the VAT in the first place? Developers? No. It is being passed on to the customer. Less VAT means more viability, which leads to an increase in supply.
Nevertheless, a lot of people still baulk at the thought of the Government building social housing because they are haunted by some bad examples from the past.
Ballymun’s social problems were caused by forcing the most vulnerable people in society to live in a complex with little or no forethought. As the city’s chief architect, Ali Grehan, said: “It was an urban design failure.” Five thousand homes constructed around a roundabout was always going to be “a dead end”.
A thriving town centre was supposed to be built, but the construction was delayed for years and residents were left without the most basic services.
But when social housing is done right, it works. Take a look at some projects around the world to see how Ireland is lagging behind.
In Belgium, the Le Lorrain complex features terraced maisonette homes, each with its own private garden and a large open communal space for residents to use.
Or check out Brussels, where the Sint-Agatha-Berchem housing project was realised in a Bourgeois cubist style. These homes are low-energy and incorporate solar panels, rainwater retrieval systems and eco-friendly materials — a far cry from the grey towers we have come to associate with social housing in Ireland.
The Netherlands deserves a similar nod for the Tower Hatert in the city of Nijmegen. There is so much attention to detail that even the railings — inspired by leaf patterns — ensure that each unit gets enough natural light and uninterrupted views.
Spain comes up trumps, too, for the Vivazz project in Mieres. It is a housing development that maintains a connection to nature. The open spaces allow natural light to enter and air to circulate, and occupants can enjoy spectacular views of the surrounding mountains.
Forget about depressing blocks of dull concrete. Many countries have achieved the admirable aim of providing people with low-cost homes, while still giving residents the dignity of living somewhere comfortable and beautiful.
We have a long way to go. The Government will suffer at the ballot box if it doesn’t take urgent action soon.
But once we start heading in the right direction, the possibilities are endless.
‘Forget about depressing blocks of dull concrete’